How to Manage Variation

“How to manage variation” may be a question you’ve pondered. To answer that question, however, it’s first important to understand variation and variability first.

Most organizations collect and report on metrics that are not descriptive of their processes. Some of you may have noticed that most metrics that are reported are the “average” and some organization also use the “median”. Most people do not understand elementary statistics and their application to business. Here is the truth of the matter: Your customers do not feel the average — they feel the variation.

An inside-out view of the business is based on average or mean-based measures of our recent past. Customers don’t judge us on averages, they feel the variability in each transaction, each product we ship, each user interface we build, each online process we create, each interaction we have on the phone, each corresondence we have through email or a letter or a phone, and every other process that touches the customer in some way or form — online or offline.

Customers value consistent, predictable business processes that deliver world-class levels of quality. They feel the difference, not the average.

What is an Average?

The first measure we would arrive at is the mean, or the average, which is described below:

The averages takes a series of discrete units and is divided by the sum count of all those units. This is the Mean or the Average.

What is a Standard Deviation?

To get the standard deviation, which is the measure of the average variation from the Mean or the Average, then, we would calculate the standard deviation like below:

Understanding the mean and the distribution from the mean is important — because our customer’s feel the variation, not the average.